Alphabet misses earnings estimates, stock plummets

The disappointing earnings report comes after its rivals for ad dollars, Facebook, Snapchat, Amazon and Twitter all posted results that were in line or above analysts' expectation last week.

So investors dumped shares in after hours trading, pushing the stock down over 7 percent.

Reuters reporter Paresh Dave.

"I think what we see here is investors sort of concern that in the future it seems like there's going to be more privacy constraints put on tech companies to limit their ability to track users and sell these really lucrative targeted ads.

And there's going to be more pressure on the companies to really step up moderation of content on places like YouTube.

All of that's going to increase costs.

On the one side and push down revenues on the other side and investors are worried that this is the start of it." Google and its rivals are all facing rising costs as they deal with data privacy issues.

For example advertisers want tighter controls on YouTube so that they don't appear to be sponsoring adult or offensive content.

And in the first quarter Alphabet's expenses also included a $1.7 billion fine from the European Commission for having placed anticompetitive advertising restrictions on websites using its searches.

About 85 percent of Alphabet's revenue comes from Google's ad business, which sells links, banners and commercials across its own websites and apps and those of partners.

Chief Executive Sundar Pichai said revenue slowdowns should be expected as the company focuses on the long term.